Newsletter

Wednesday, January 16 2018

John Bollinger Commentary From January 2018 Newsletter

The market surge in the first days of 2018 was accompanied by a resurgence of interest in the FAANG stocks. In case you missed all the hoopla, the FAANG stocks are a sort of modern list of 'nifty fifty' or 'one decision' stocks, buy 'em and hold 'em forever. Facebook, Amazon, Apple, Netflix and Google are the poster children. (Not sure why Tesla isn't on that list, FATANG.) I constructed an index to track the mania and after a period of under-performance in late 2017, it surged to a new high in the first week of 2018. Clearly investors are comfy traveling in packs while clinging to easily understood ideas.

We note that some of the bigger names on Wall Street are getting bearish, with calls for a correction or worse. Taking a look at market internals we just don't see the case for a big correction at this time. The advance – decline lines are all strong, participation is good, the new 52-week highs list is solid, and the market was even able to overcome a short-term overbought condition and rally. We have come a long way and stocks do look pricey, but we still need to wait for cracks in the facade to appear before we get bearish.